Guest Post: Will Rail Run Out Of Steam Post-Keystone?

More than 97,000 rail carloads of crude oil were delivered in the United States during the first quarter of the year. That's 20 percent more than the fourth quarter of 2012 and 166 percent more than during the same period last year. Rail shipments of grain, metallic ores and minerals declined, however. Oil companies are moving more of their oil by rail because pipeline capacity can't keep up with North American production gains. Last week, a pipeline planned from Texas to California was shelved because of the lack of shipper interest, though for rail, there's been relative surge in crude oil traffic. It remains to be seen if that can be sustained, however.

The Association of American Railroads said 97,135 carloads of crude oil traveled by rail in the United States during the first quarter of the year. That amounts to about 68 million barrels of oil over the course of four months. For the week ending May 25, rail shipments overall were down more than 3 percent compared to the same time last year. Grain deliveries were down 21.8 percent and metallic ores and minerals were down more than 10 percent when compared to last year.

Oil companies are turning to rail deliveries as North American oil production overwhelms existing pipeline capacity. Provided the U.S. government approves Keystone XL, it will be at least two more years before 830,000 barrels of oil per day in extra pipeline capacity comes on stream for U.S. refiners. In Canada, opposition to the Northern Gateway pipeline from the provincial government in British Columbia means an uncertain future for the 525,000 bpd project planned by Enbridge.

The American Petroleum Institute reports that U.S. oil production in March increased 13.8 percent year-on-year to 7.1 million barrels per day. For its part, the International Energy Agency said it expected North American oil production to account for more than 60 percent of the gains seen from outside the 12-member OPEC cartel. That suggests the rate at which production is increasing is faster than pipeline construction, federal permits notwithstanding.

Last week, pipeline company Kinder Morgan said it was focusing on rail deliveries from Texas oil fields for the short term. That followed a decision to scrap a pipeline that could've sent 277,000 bpd to California refiners. In March, Phillips 66 said it was "helping to shape the energy revolution in the U.S." by exploring its options for rail loading. Two years ago, BNSF Railway shipped 70,000 barrels of oil from its near Bakken Oil Express, a rail hub servicing North Dakota.

The debate over pipelines versus rail hinges on access, price and reliability. Rail shipments are more expensive than pipeline, but rail has more diversity. In terms of spills, pipelines are far more reliable than the alternative, but when a train derails, any oil spilled is typically measured in hundreds of gallons versus thousands of barrels. Kinder Morgan's lack of shipper interest suggests that, for now, there's not much interest in new pipelines, at least from Texas. While much of the argument is, at least in some circumstances, like comparing apples to oranges, for now, it seems trains are winning the race. What happens long-term with more pipeline access, however, remains to be seen.

British Columbia really fucked up on this I don't mind saying, and it almost smacks of a sort of crab mentality. So worried about your pristine geography, but, you'll be too fucking hungry to actually enjoy it. There are a lot of technological add-ons enbridge would have been prepared to implement to satisfy regulatory (environmental) issues. But nope. fuck it. Well there you go. The land of landlocked resources and as a result of stubborn, political bullshit, everybody suffers and is worse off.

So fuck it. Alberta will take it east. Much of the (corridors) lines already exist and New Brunswick and Nova Scotia are ALL OVER this. Plus New Brunswick wants to refine it as well. BC can continue to sell post cards and smoked fish.

ALBANY, N.Y. (WIVB) - A bill currently making its way through the State Legislature would make it a crime to annoy a police officer, a move that could have far reaching consequences.

The State Senate passed the bill Wednesday that makes it felony to "harass, annoy, or threaten a police officer while on duty." The bill was sponsored by local Senators Pat Gallivan, George Maziarz and Michael Ranzenhofer, as well as Senator Joe Griffo (R) of Rome.

Griffo stated, "Police officers who risk their lives every day in our cities and on our highways deserve every possible protection, and those who treat them with disrespect, harass them and create situations that can lead to injuries deserve to pay a price for their actions."

Anyone found guilty under the bill, should it become law, could face up to four years in prison.

The insidious thing about laws...ONCE PASSED...is they then have the vehicle to sneak little amendments into future laws.

The "harass, annoy, or threaten a police officer while on duty" can easily become, by later amendment or attachment to an unrealted piece of legislation...video taping a cop while on duty is harassment or annoying...or the following year it becomes..."annoying" a cop while off duty is also a felony.

Ya gotta nip this kind of bullshit in the bud...its always been a crime "threaten" anyone with bodily harm, including cops.

A tanker train is just a pipeline on wheels .... probably has less rolling resistance .... than pumping molasses .... fully loaded downhill to Texas .... back to Canada with illegal aliens .... duct taped to the Domeliner express ! They could ship back kerosene .... to wash the tar sands with and prepare it for the centrifuge .... the Petrotron .... continuous feed separator .... that mother spins 12,000 tons of material .... at any moment .... it's under the Calgary airport .... so it's running all year 24/7 ! How am I driving ? Report discourteous driver to 1 (800) FUC - KOFF ! Do Chen got the contract for the Petrotron's tapered roller bearings !

I see nothing wrong with using railroads to temporarily boost transaction volume that may not last if the 2nd wave of the economic tsunami hits. Why build pipelines when the rail traffic is suffering from excess capacity precisely due to falling trade volume of other commodities. There are gonna be lots of empty train cars, ships and plains sitting around in the near future. Less business means cheaper delivery. Why build permanent pipes then?

I say, all of these are logical business decisions.

I'm in computing and we often rent processing power, even though it costs more compared to expanding infrastructure, the spikes in demand are typically short term. Then our own clusters sit idle for weeks.

Is this a leading indicator of anything? Don't think so. It's an indicator that railroads exist and that they are used to deliver goods.

The Association of American Railroads said 97,135 carloads of crude oil traveled by rail in the United States during the first quarter of the year. That amounts to about 68 million barrels of oil over the course of four months.

Delware City, Delaware, there's an old Valero plant that has been modified to handle this oil. I guess it's a little dirtier than other oil. The rail cars are coming in at all hours, blocking roads and getting people all sorts of hinky.

From what I've read the Northern Gateway has been held up because the province of British Columbia wants to be able to get a slice of the profits. This is not really about people sticking it to the oil companies because of environmental beliefs. That's a red herring and convenient excuse to provide moral righteousness forholding up the project.

The globalists will win, and everyone else will lose.. I fear as in 2008 shorting will be banned again.......... to be expected economy run by on the one hand mutual master-raters historic criminal jerk offs.